WASHINGTON -- Federal agencies, including the Defense Department, are facing unprecedented budget problems that are creating a new reality for government IT.

IT managers are turning to agile development to speed up projects and to quickly show their value. The days of the big, lumbering, multi-year government IT project may be slowly ending.

Government agencies, which spend about $80 billion a year on IT, are preparing for a possible shutdown as early as next month, as well as spending cuts from 8% to 10% if Congress doesn't end the default and sequestration threats. On top of this, agencies continue to operate on short-term budgets because lawmakers have yet to approve the yearly budget.

"This lack of budgetary stability makes it very hard to plan, and I think extremely hard to plan well," said Robert Hale, the comptroller and chief financial officer at the Defense Department, in a talk this month at the Brookings Institution.

In this turbulent environment, Kris van Riper, who heads the consulting firm CEB's (formerly known as Corporate Executive Board) government practice, said she is seeing increasing interest in agile development at agencies.

"Planning out multiyear projects where you don't see the deliverables for extended time periods in a traditional waterfall method really isn't going to work," said van Riper.

Agile methodology emphasizes collaboration with developers, managers and customers -- anyone with a stake in a project outcome -- as well as iterative development cycles that produce deliverables in short increments.

The U.S. Department of Veterans Affairs was a relatively early adopter of agile development. The VA's CIO, Roger Baker, said, "we are huge fans of agile, and are using it in our most critical programs."

Baker, in an email, said that the agile development process has been successful because of customer involvement.

"Most critically, we get the customer deeply involved in the program, defining what the system must do, how it should do it, what the workflow must be, and how the UI (user interface) should look," Baker said.

As a result of this participation, "the end users are always happy with the end product, and they feel like it's their system, not ours," said Baker. "And the code is less buggy, frankly."

The VA has about 200 ongoing development programs, but it is not using agile in all of them. "I'd insist on agile in all programs, but I don't think we yet have the breadth of expertise to draw on to do so," Baker said.

Sanjiv Augustine, president of LitheSpeed, a Washington area agile consulting firm, said the budget problems with Congress are pushing adoption of agile.

Just as the recession helped drive the private sector toward greater agile adoption "in search of faster delivery and better results," said Augustine, "it appears that looming budget problems are beginning to have the same catalytic effect in the public sector."

Agile has gotten traction in some defense and intelligence areas, said Bob Payne, vice president at LitheSpeed. Those areas typically have shorter deadlines, are more mission focused "and need to rapidly adapt to new situations," he said.

The budget problems "have added fertilizer" to the push to adopt agile, said Lawrence Fitzpatrick, president of Computech Inc., a software services firm, who is on the Agile Development Committee for the American Council for Technology and Industry Advisory Council.

"If you can show results sooner and more effectively, the chance that you won't be defunded goes up," Fitzpatrick said.